Question

Money laundering has become a mechanism for financing terrorist activities. Describe how and why terrorist organizations use money laundering a tool for financing their activities. How can investigators detect and investigate these schemes? What specific types of evidence will be useful to investigate these crimes? Identify a real case of money laundering as an example in your answer

Answer 1

Money laundering is process by which the criminals use the financial system to make illigetimate money appear legitimate through a web of complex transactions.

Process of money laundering:

(i) Placement Stage : This is the initial stage in money laundering where in criminals move physical cash in to the banking channel.

(ii) Layering stage : In this stage , the money deposited in the banks is routed through complex financial transactions where the link to the origin of the funds is broken.

(iiI) Integration Stage : The illicit funds are now pushed in to the economy and financial system by providing legitimate explanation for illegitimate funds.

Terrorist agencies use money laundering tools to finance their activities since in such a prcess it is very difficult to establish the link to the illegally gotten money and trace it back to the crime.

Investigators can detect such schemes if they find any inconsistent business activites of companies or individuals outside their routine activities. Such activities can include unusual high cash transactions, dealing in multiple currencies, transactions which do not meet the business' core activities.

Some of the ways in which investigators can investigate the schemes are as below :

(i) The first step is to identify the business or individual profile of the criminal who has engaged in such an activity.

(ii) If a business group or an organisation is involved then the next step is to identify the key personnel who run the group since they will be directly involved in this.

(iii) The third step is identify the money flow patterns of the company and the location of the bank accounts of the organisation.

(iv) Obtaining the financial records and the books of the company and corroborating the same with externally obtained bank statements.

One of the world's most famous terrorist organisation Al Qaieda has been involved in multiple terrorist crimes that has killed millions till date uses money laundering techniques to finance their activities. The organisation had multiple financial interests through banks, holding companies, foundations,properties and charities in Britain , France and many other European countries. The organisation mainly took the help of BCCI in Britain in the 1980s before the bank was closed down by Bank of England.